Apple Intelligence is not enough to drive China sales: UBS

Apple's (AAPL) upcoming integration of Apple Intelligence software into its smartphone lineup may not be enough to boost sales in the Chinese market in 2025, according to UBS analyst David Vogt. He suggests that competition from Huawei's resurgence in China could slow Apple's regional growth prospects.

Yahoo Finance tech reporter Dan Howley breaks down the details.

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This post was written by Angel Smith

Video Transcript

Apple is launching its next generation A I centric iphone in September.

But some analysts say the company's new Apple Intelligence platform may not be enough to spark sales in 2025 for more.

We have Yahoo Finance's very own.

Dan Howley Dan.

That's right.

David Vaught at U BS Global Research is essentially saying that uh Huawei's push in China and its growth uh resurgence really after it was uh the US, tried to kneecap it in 2019 is really putting a governor on Apple's ability to grow in 2025.

And that the Apple Intelligence platform may not be what it's uh not necessarily cracked up to be, but may not be the kind of uh offering that really pushes consumers to get out there and buy similar uh to five G. Obviously, we just heard Tom Forte talking about that uh a second ago that five G was really uh kind of a a cycle change.

Uh We went from uh four GLTE to five G faster speeds.

I'll be honest with you, if I'm streaming stuff on my phone, I really don't see that much of a difference, but whatever it was, you know, cool marketing, I guess.

Uh Apple Intelligence uh is kind of a, a new means of getting people to buy uh smartphones.

It's similar to what we're gonna see from uh Google and their upcoming pixel phones that they're gonna launch uh in August as well as uh from Samsung, which is going to announce new phones uh this month.

Actually, uh they're expected to announce new phones uh this coming uh next week.

So uh we're expecting to hear more and more about A I but, you know, with that, you would expect means more iphone sales.

Uh according to uh David Vault though, it may not be this big push that Apple hopes it will be.

Yes.

So my, my question to you is they're up against some stiff competition.

They also the fact that in China, at least the consumer a cooling just a bit.

So what's the thought out there from the street as to what Apple needs to do in order to regain some of that lost momentum?

Well, they're trying to do that with, with deep uh uh cuts on s uh uh prices right there.

There's doing a lot of sales uh in China trying to get more people involved.

Obviously.

Uh earlier last week, uh Bloomberg had reported that there was a 40% jump in my iphone sales in China uh after a 50% jump in sales uh in April.

Uh but there's, there's mixed kind of uh messages out there, we saw uh counterpart research.

Uh uh David actually citing it, his note saying that sell through was relatively low for Apple year over year.

I think it was nine basis points versus a larger growth of I believe around 11% for the broader market in China when it comes to smartphone sales.

So, you know, it's Apple doesn't give us insight as far as the number of devices it actually sells, they stopped doing that a long time ago.

So now it's basically best estimates as to what users are buying.

Um And so, you know, it could be that the sales are working, they're helping Apple.

Uh but it doesn't mean that Huawei is going to sit idly by and allow Apple to just, you know, discount its phones and win in that way.

So Huawei obviously doing similar things uh to its own credit and then they're also rolling out uh foldable phones which are larger in China.

They, they uh that's a market that's really kind of interested in those kinds of products as well as some areas of Europe.

I've seen a lot of people uh walking around recently with Samsung's foldables.

Um And so in China, there are foldables from the likes of Huawei and Xiaomi and such.

So uh that's kind of a means that Apple could use perhaps a new form factor to get consumers more interested.

I think uh generally, it's about they have 2 billion users, right now, give or take.

It's all about the, the software strategy and, and getting people hooked into subscriptions, which has been, it's kind of uh modus operandi for some time now.

All right, Dan Holley.

Great stuff.

Thanks so much.